X5 Retail, Russia’s largest retailer by sales, today (20 October) suggested that its multi-format strategy had allowed it to circumvent some of the harsher effects that the economic downturn has had on consumer spending in the country.
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Speaking to analysts, CEO Lev Khasis said that the company has aimed to build the success of its multi-format channels, strengthen its value positions and drive like-for-like and top line growth.
Khasis acknowledged that Russian consumer confidence had been badly hit by the economic crisis – with the consumer confidence index (CCI) reaching its lowest point in the first quarter since 1999. However, he added that there is some cause for optimism, as in the second and third quarters the CCI “marginally recovered”, indicating that a growing number of Russians believe the economy will improve next year.
However, he continued, declining incomes had forced Russian consumers to trade down, with 80% of consumers stating that they are ‘definitely’ or ‘probably’ more thrifty when buying FMCG products in May, up from 73% in November last year.
Despite this increasing tendency to trade down among Russian consumers, X5 has been able to post relatively stable like-for-like sales growth since the onset of the economic crisis, outperforming its competition, Khasis claimed.
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By GlobalDataDuring the first nine months of the year, X5 like-for-like sales rose 9%, compared to 7% from Magnit, 3% from Seventh Continent and 1% from Dixy.
“X5’s LFL performance is stable versus competition thanks to our multi-format approach,” Khasis said.
X5 operates in the soft discount, supermarket and hypermarket formats.
